ICMSA and ICOS continue work on opening up foreign credit lines for dairy expansion
REPRESENTATIVES of the Dairy Sector have prepared a comprehensive report on the capital and credit requirements for the sector up to 2020. The report which was compiled by a working group representing both dairy farmers and processors was approved at a meeting at the Horse & Jockey on Thursday 7 April 2011.
The meeting which was convened by the ICMSA President, Jackie Cahill, agreed to use the report as a basis for discussions and negotiations with Irish and foreign banks and Government Departments and public agencies.
Jackie Cahill commented: "The cost and availability of credit is a major issue for dairy farmers. We are very concerned the restructured Irish banks will be restricted in supplying credit to the sector for the foreseeable future. Furthermore, we are also concerned that the Irish banks will be tempted to impose higher interest rate margins than those charged elsewhere in Europe as they seek to repair their balance sheets and as they pass on the interest rate penalty applied to their funding to their customers. If the Irish banks imagine that they are going to repair their profit margins on the backs of their farmers customers then they are very much mistaken. "
Those sentiments were echoed by Pat McLoughlin Chairman of ICOS: "In a globally competitive marketplace, it is imperative that both processors and farmers alike to continually improve and enhance their capability. Consequently, having access to the proper credit and capital facilities are vitally important if the Irish dairy industry is to maintain its competitiveness in the market place." While CEO of ICOS, Tom O'Callaghan stated "ICOS supports and encourages the ongoing initiative to facilitate the availability of credit within the Irish dairy industry. Providing capital and competitive credit facilities is of critical importance - most particularly in the case of young farmers - if we are to achieve our true potential by 2020."
Jackie Cahill said that the report would be submitted to the Government and the various state agencies immediately for prompt action to ensure that an effective framework for providing adequate and competitively priced credit is put in place. He said that restricted and expensive credit will undermine our competitiveness, derail the forecasted expansion of the sector and hit exports. It is for this reason that it was agreed that representatives of the sector would make contact with a number of foreign and Irish banks so that there would be additional possibilities for getting credit at competitive rates to Irish dairy farmers.
The analysis in the Keane Report – which estimated the cost of the milk production expansion envisaged in the 2020 report - found that the Irish dairy sector has a relatively low level of borrowing and that it has the resilience required for sustainable growth over the coming decade. However, an adequate flow of competitively priced credit will be essential to realising this potential.